AI could widen the gap between big and small companies

Executives expect to be using artificial intelligence (AI) across “core supply chain disciplines” within two years. However, there is a clear gap between big and small companies in terms of implementation. These findings come from research by consulting firm H&S.

At large companies, executives are implementing artificial intelligence as a means of boosting efficiency, resilience and innovation. This is done thanks to the “universal recognition” that the technology will impact all business units and that employees in all functions will need to build their understanding of the technology, according to the report. However, the researchers note that there is a “clear gap” between smaller and larger businesses which “risks being exacerbated”.

Smaller firms feel less urgency

“The largest firms are feeling more pressure to integrate AI into their operations, and are already engaging with external technology vendors, hiring talent in AI, and bringing in consultants to build their AI capabilities. There is much less urgency from smaller firms, and they are not acting as quickly in this space,” commented Camilla Gilone of H&S, in the publication Supply Management.

According to the report summarizing the research findings, 81% of larger companies are working on AI with external partners or vendors, while only 42% of smaller companies are doing so. Similarly, while 32% of larger companies are hiring full-time leaders to run the implementation of AI, the figure at smaller companies is just 5%.

Concern about being replaced

According to the survey – which was conducted among 850 procurement managers in Europe and the US – 62% of respondents believe AI tools like ChatGPT will help procurement perform better and improve decision-making, but 35% are concerned that their role will be replaced by generative AI.

“It is important to note that the adoption and implementation of AI in supply chains can vary widely depending on the industry, company size and specific business goals,” Gilone continued. Because of the scale and complexity of larger companies’ operations, she added, they have greater potential to benefit from AI-related investments.

Implementation costs are a challenge

Smaller companies often face challenges when it comes to investing in artificial intelligence for their supply chain operations due to the cost of implementation. This is because they have much more limited access to data scientists, machine learning engineers and other technology professionals.

Still, according to the researchers, even smaller companies can benefit from AI. “They too can use creative approaches, partnerships and strategic thinking to harness the power of AI to improve their operations and remain competitive,” Gilone concluded.